MOZAMBIQUE

Photo: © UNICEF/MOZA2013-00319/Alexandre Marques BUDGET BRIEF 2018 SOCIAL ACTION

Key Messages1:

• The 2018 State Budget Law (LOE) combined Social Action and Labor & represents 0.6 percent, which is still far from the 2.4 percent target laid out in Employment into a single priority sector, for the fourth consecutive year. the National Basic Social Security Strategy (ENSSB) for 2016-2024. Nevertheless, other relevant budget and expenditure documents, such as State Budget Execution Reports (REOs) and General State Accounts (CGEs) • The Social Action Sector has received an increasing share of internal resources classify Social Action and Labor & Employment as two different priority over the past decade. The 2018 internal allocation is the largest ever nominal sectors. Considering that the two sectors have different objectives and target contribution from the Government to the sector. In proportional terms, the populations, it would be important that the LOE as well classified Social internal to external resources ratio is budgeted at 71 percent to 29 percent. Action and Labor & Employment separately. Nevertheless, it is important to highlight that the largest external investment is the World Bank credit to the Productive Social Action Program (PASP); • Of the MT 6.7 billion (b) allocated in 2018 for “Acção Social e Trabalho”, 4.6 billion while this is tracked as external resources, the Mozambican Government will MT correspond with basic (non-contributory) Social Protection programmes. have to pay back the loan and the corresponding interest. Hence, the PASP Given that no Price Subsidies (fuel, bread, transportation) are referred into program is de facto internally-funded. LOE 2018, “Subsídios as Empresas Públicas” on the amount of 735.5 million MT remain wrongly included as within “Social Action and Labour”. • Over 90 percent of the Social Action Sector budget was allocated to INAS, of which the largest share was directed to the non-central level. INAS • Those Public Enterprises, as referred in LOE are “às empresas públicas que programs received the following allocations in 2018 budget: (i) Basic Social pelas suas atribuições procedem aos objectivos sociais sem carácter lucrativo, Subsidy Program (PSSB) was allocated MT 3.1 b (or 68 percent of all INAS estando contempladas a Rádio Moçambique, Televisão de Moçambique, programs), (ii) Productive Social Action Program (PASP) MT 1.1 b (or 23 Hidráulica do Chókwe, Imprensa Nacional de Moçambique (INM), Regadio percent), (iii) Direct Social Action Program (PASD) MT 283 m (or 18 percent), do Baixo Limpopo, Sul e Empresa Nacional de Parques de Ciências and (iv) Social Action Social Services (SSAS) MT 94 m (or 3 percent). With this e Tecnologia”. Allocations to cover exploration deficits of those public budget at disposition, INAS programs targeted a total of 567,290 beneficiary enterprises should not be considered in any way as social action expenditure, households. is needed and strongly recommended to be referred separately. • While INAS recently introduced criteria to target beneficiaries in a more • The Social Action Sector - intended in its narrow definition as the sector equitable manner considering geographical disparities among provinces, managed by MGCAS and INAS - was allocated MT 6.1 billion (b) in the 2018 targeting needs to be further improved. In fact, on the one hand nominal Budget, representing the largest ever nominal allocation and the second largest allocations per province show better targeting of most disadvantaged areas; real allocation to the sector. The allocation to the sector is worth 2 percent of however, on the other hand, per capita allocations- taking into consideration the entire 2018 State Budget; Less financial operations and debt servicing, it the distribution of poverty – reveal that there is still room to enhance represents 2.6 percent. As a share of GDP, the 2018 allocation to Social Action geographical equity of Social Protection Programs.

1. Please note: All analysis was carried out with publicly available information. Where limitations were encountered, notes are made in the text. There are some minor discrepancies between the totals presented in past Budget Briefs and those presented in the 2018 edition. As data sources were updated, UNICEF revised its calculations. The viewpoints expressed in this brief are those of the author and do not necessarily represent those of UNICEF . 1 1. How is the Social Action Sector defined?

The Social Action Sector refers to the institutions in charge of Institute (INAS). At the sub-national level, the sector is managed by MGCAS Mozambique’s social protection systems that receive autonomous Provincial Directorates and INAS Provincial and District Delegations. While budget allocations through the State Budget. Although the 2018 State in the past other institutions belonged to the sector’s organigram, DNPO’s Budget Law (LOE) combined Social Action and Labor & Employment into a single latest “Methodology for the calculation of Priority Expenditure” has clarified priority sector, other relevant budget and expenditure documents, such as State that the Ministry of Veterans’ Affairs (MAAC) ceased to be included in the Budget Execution Reports (REOs) and General State Accounts (CGEs), report Social sector and the budget for the District Services for Health, Women’s Affairs, and Action spending separately from Labor & Employment spending, considering Social Action (SDSMAS) is accounted for within the Health Sector. In total, the them as two different priority sectors2. It would be important that also the Social Action Sector is composed of 32 autonomous budget holding institutions LOE classified Social Action and Labor & Employment as two distinct priority (see Figure 1). sectors, as they have different goals and target different populations. In addition, although the 2018 LOE does not include price subsidies (i.e. fuel subsidies, wheat The Social Action Sector is guided by the National Basic Social Security flour subsidy, and transporter subsidy), Public Enterprise Subsidies have been Strategy (ENSSB) for 2016-2024. The Social Action Strategy, which was again incorrectly included under the Social Action & Labor Sector. These subsidies approved by the Council of Ministries on 23 February 2016, defines the guiding are allocations to cover exploration deficits of public enterprises and should not be principles and targets for basic Social Protection in Mozambique. According considered in any way as social action expenditure. to the ENSSB, the State Budget should allocate 2.24 percent of GDP to Social Protection interventions by 2024. Additionally, two multisector strategic For these reasons, and with the purpose of further improving transparency plans define Social Action Sector targets: (i) the PQG 2015-2019 states that of the sector’s spending, this Budget Brief will focus exclusively on Social 25 percent of vulnerable households should be covered by basic social security Action and exclude both Labor & Employment, and Subsidies. The Social programs by 2019 and (ii) the National Development Strategy (ENDE) 2015- Action Sector is managed at the central level by the Ministry of Gender, 2035 states that 75 percent of vulnerable households should be covered by Children and Social Action (MGCAS) as well as the National Social Action basic social security by 2035.

SOCIAL ACTION, MOZAMBIQUE

MGCAS + INAS Delegations

CABO CABO Pemba, Mocímboa da Praia DELGADO DELGADO and Montepuez

NIASSA NIASSA Cuamba, and Marrupa

NAMPULA , , Nampula and Ribáue

TETE TETE Marávia, Moatize and Tete

ZAMBEZIA ZAMBEZIA Gurúe, Mocuba and Quelimane

MANICA MANICA Bárue and Chimoio SOFALA SOFALA Beira, Caia and Machanga

INHAMBANE INHAMBANE Inhambane, Vilankulo and Maxixe

GAZA GAZA Xai-Xai, Chokwe, Chibuto and Chicualacuala

MAPUTO MAPUTO Matola PROVINCE PROVINCE

MAPUTO CITY MAPUTO CITY

Figure 1: Organigram of the Social Action Sector

2. 2017 CGE, Mapa III-3 Despesas nos sectores economicos e sociais. 2018 REO II, Tabela 30 – Despesas nos sectores economicos e sociais. 2 2. What trends emerge from the Social Action budget?

The Social Action Sector was allocated MT 6.1 billion (US$ 101 million) in the 2018 State Budget. In nominal terms, the 2018 allocation to the sector represents a 29 percent increase compared to last year’s budget, a 39 percent increase compared to revised allocation, and a 75 percent increase relative to expenditure (see Glossary of budget terminology). In real terms, it represents a 20 percent MT increase compared to last year’s budget allocation, a 30 6.1 percent increase compared to the revised allocation, and a billion is the amount 63 percent increase relative to expenditure (see Figure 2A allocated to the Social & B). From a historical perspective, the 2018 social action Action sector in the allocation is the largest of all time in nominal terms, but the second largest (after 2016) in real terms. Budget and 2018 State Budget expenditure in the Social Action Sector have been overall well-aligned over the years; however, disparities between budget and expenditure have progressively increased since 2014 and have reached over 25 percent difference last year. Hence the initial budget allocation is no longer indicative of how much will be actually spent in the sector.

Although the Social Action Sector receives the and approximately 250 percent in real terms between 2008 and 2017. The smallest share of resources relative to the other social increase in expenditure over time was largely captured by INAS: in fact, sectors, it has demonstrated the largest nominal and whereas INAS was responsible for just 23 percent of Social Action spending in real increases in expenditure over time. In nominal 2008, in 2018 Budget it is responsible for 91 percent of total sector spending. terms, the initial allocation grew from MT 0.11 b in 2008 The large increase in spending helped INAS more than double coverage of its to MT 6.1 b in 2018, and expenditure increased from MT Programs: Basic Social Subsidy Program (PSSB), Direct Social Action Program 0.6 b in 2008 to MT 3.5 b in 2017. Remarkably, spending (PASD), Productive Social Action Program (PASP), and Social Action Social in the sector increased over 500 percent in nominal terms Services (SSAS) (see Section 4.3 for more details on Social Action Programs).

8 8 ) ) 9 9 NOMINAL TERMS 7 REAL TERMS 7 (INFLATION ADJUSTED) 6 6

5 5

4 4

3 3 CURRENT CONSTANT 2 2

1 1 Billions of Meticais (10 Billions of Meticais (10 0 0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budget Budget 0.1 0.4 0.7 1.3 1.6 2.5 3.9 4.5 3.8 4.7 6.1 Initial Allocation 0.1 0.5 0.7 1.2 1.4 2.1 3.3 3.6 2.5 2.9 3.4 0.7 0.7 1.0 1.5 1.7 2.6 3.8 4.5 3.9 4.4 Revised Allocation 0.8 0.8 1.0 1.3 1.5 2.2 3.1 3.6 2.6 2.6 0.6 0.7 0.7 1.3 1.6 2.5 3.3 3.4 3.6 3.5 Expenditure 0.7 0.8 0.7 1.1 1.5 2.1 2.7 2.7 2.4 2.1

Figure 2 A & B: Social Action Sector budgeting and expenditure Source: Author’s calculations from the CGE 2008-2017, LOE 2018. World Bank, World Development Indicators: Consumer Price Index (2010 = 100). Note: While years 2008-2017 display expenditure figures, 2018 is the initial budget allocation.

3

Figure 2 A & B: Social Action Sector budgeting and expenditure Source: Author’s calculations from the CGE 2008-2016, REO IV 2017, LOE 2018. World Bank, World Development Indicators: Consumer Price Index (2010 = 100). Note: While years 2008-2017 display expenditure gures, 2018 is the initial budget allocation. FIGURAS 2A e 2B Photo: © UNICEF Mozambique/2012/Ian Berry/Magnum Photos

The 2018 Social Action sector’s budget occupies a 2 percent share of the to increasing funding to Social Action, despite the sector is still receiving the entire State Budget; this represents an increase from the 1.3 percent smallest share of public spending relative to other social sectors. share last year (see Figure 3). It must be noted that the according to the methodology that the Government of Mozambique applies to calculate sector The Social Action Sector is worth 0.6 percent of expected Gross Domestic Product shares – which takes out financial operations, debt servicing and subsidies from in 2018 Budget (see Figure 3). This is on par with 2017 sector’s share of GDP in the common denominator of the entire State Budget – the Social Action Sector the budget (i.e. 0.6 percent), but it represents an increase relative to the share share increased from 1.9 percent in 2017 to 2.6 in 2018 Budget3. Regardless of GDP considering 2017 expenditure (i.e.0.4 percent). Still, the sector is far from of what methodology is used to calculate sectors’ shares, Social Action is the meeting its ENSSB goal of allocating 2.24 percent of GDP to social action. Larger only of the four social sectors that saw its share of total expenditure increase budgetary allocations to the sector are needed to reach this ENSSB goal and is between 2008 and 2018. In fact, the weight of the sector more than doubled still far from international benchmarks in developing countries. over the past decade4. This trend demonstrates the Government’s commitment

3.0%

2.63% 2.5%

2.0%

1.5%

1.0%

0.6% Share of the State Budget and GDP (%) of the State Share 0%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budget Social Action Sector share of State Budget Social Action Sector share of State Budget less financial operations, debt servicing, and subsidies Social Action Sector share of GDP

Figure 3: Trends in the weight of the Social Action Sector relative to total government spending and GDP Source: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

3. The Government of Mozambique, instead of using the total volume of the State Budget as a denominator, calculates the percentage share utilizing the total State Budget minus debt servicing, financial operations, and subsidies. This report calculates shares out of the total State Budget as is standard practice for international benchmarking. 4. This share is computed considering the narrow definition of Social Action (MGCAS/INAS activities only) and including financial operations and debt servicing in the denominator. 4

Figure 3: Trends in the weight of the Social Action Sector relative to total government spending and GDP Source: Author's calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure. FIGURA 3 3. What is the source of Social Action Sector resources?

The Social Action Sector in Mozambique is financed with internal (i.e. coordinated between the donor and MGCAS and applied through a variety of domestic) and external (i.e. foreign) resources. Internal resources are derived modalities including: (i) direct government support with government-only or from taxes, tariffs, duties, and internal credits. Up until 2015, internal resources joint partner-government implementation, often “On-Budget, On-CUT”; (ii) were supplemented by General Budget Support (GBS) from a group of donors. partner or third-party implementation, often “On-Budget, Off-CUT”; or (iii) External resources allocated to the Social Action Sector are “Bilateral Project partner or third-party implementation, but “Off-Budget”. Funds”, which are grants or credits. Bilateral project funds are –in theory–

3.1 Internally- versus Externally-sourced Resources

The Government of Mozambique has steadily increased its funding averaged 79 percent internal to 21 percent external. In 2008, 62 percent of to the Social Action sector, and it has reached its largest nominal resources came from the Government while 38 were from donors. Later, the contribution to the sector in 2018 budget (see Figure 4A). In nominal internal to external resources ratio continued to increase, and reached its peak terms, internal resources allocated to Social Action in 2018 Budget are worth in 2014 (i.e. 94 percent internal to 6 percent external). Since then, the portion MT 4.3 b. This represents over a 40 percent nominal increase relative to 2017 of internal resources has progressively decreased until this year’s allocation internal resources dedicated to the sector. From a historical perspective, Nevertheless, it is important to highlight that the only external investment is considering that ten years ago the government dedicated just MT 370 m to the World Bank credit to the PASP program; while this is tracked as external the Social Action sector, 2018 internal sector allocation is about 1000 percent resources, the Mozambican Government will have to pay back the loan and the larger. In real terms, the internal contribution to the sector increased by 34 corresponding interest. Hence, the PASP program is de facto internally-funded. percent relative to 2017, and by over 400 percent than in 2008. Finally, on external support, it is worth mentioning that the Social Action sector benefits from technical and financial support from international partners In proportional terms, internal resources allocated to Social (i.e. ILO, UNICEF, WFP, etc.) in developing and strengthening the Basic Social Action in 2018 make up 71 percent of the sector budget, while Protection system in Mozambique, but this support is not recorded in the LOE external resources make up 29 percent. This represents a decline as the funds are not transferred to INAS/MGCAS. of the internal resources share relative to last year (see Figure 4B). Between 2008 and 2017, the sector’s internal to external resources ratio

NOMINALNOMINAL TERMS TERMS PROPORTIONALPROPORTIONAL TERMS TERMS 7 7 100%100% 90% 90% 6 6

) ) 80% 80% 9 9 5 5 70% 70%

4 4 60% 60% 50% 50% 3 3 40% 40%

2 2 30% 30% CURRENT CURRENT Share of Social Share of Social Share 20% 20% 1 1

Action Expenditure, % Expenditure, Action % Expenditure, Action 10% 10%

Billions of Meticais (10 Billions of Meticais (10 0 0 0% 0%

2008 20082009 20092010 20102011 20112012 20122013 20132014 20142015 20152016 20162017 20172018 2018 2008 20082009 20092010 20102011 20112012 20122013 20132014 20142015 20152016 20162017 20172018 2018 Budget Budget Budget Budget ExternalExternal Resources Resources ExternalExternal Resources Resources InternalInternal Resources Resources InternalInternal Resources Resources

Figure 4 A & B: Provision of internal versus external resources Source: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

FigureFigure 4 A & 4 B:A &Provision B: Provision of internal of internal versus versus external external resources resources 5 Source:Source: Author's Author's calculations calculations from from the CGE the 2008-2017;CGE 2008-2017; LOE 2018. LOE 2018. Note:Note: The 2018 The 2018 shares shares are initial are initial budget budget allocations allocations while while the 2008-2017 the 2008-2017 shares shares are expenditure. are expenditure. FIGURASFIGURAS 4A 4A e 4Be 4B 4. How are Social Action resources spent?

The Ministry of Economy and Finance releases initial funds (dotação inicial) financial management information system), which sources quarterly budget via the CUT to each autonomous budget-holding social action institution (i.e, execution reports (REOs) and the annual General State Account (CGE). The way INAS delegations) and subsequently updates the allocation based on budget the 2018 social action budget will be spent can be analyzed from the following execution rates and available resources (dotação actualizada). The institutions four perspectives: track spending (execução) through the e-SISTAFE (Government integrated

4.1 Recurrent versus investment spending

In 2018, recurrent spending for the Social Action Sector is budgeted Figure 5B).In 2008, recurrent expenditure was worth 81 percent of total sector at MT 6.03 b, the largest ever allocation to recurrent, and investment expenditure, while investment was worth 19 percent. Recurrent expenditure is budgeted at MT 0.08 b in nominal terms (see Figure 5A). Historically, progressively increased relative to investment and reached its peak with a 99 spending in the Social Actor Sector has been predominantly recurrent (see percent share both in 2016 and in 2018 Budget.

NOMINAL TERMS PROPORTIONAL TERMS 7 100%

) 90% 9 6 80% 5 70% 4 60% 50% 3 40% 2 30% CURRENT 20% 1 of Social Share 10% Action Expenditure, % Expenditure, Action

Billions of Meticais (10 0 0%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budget Budget Investment Investment Recurrent Recurrent

Figure 5 A & B: Recurrent versus Investment Resources Source: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

Figure4.2 5 A & B: RecurrentResource versus investment use resources by Social Action Institution Source: Author's calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initialPROPORTIONAL budget allocations whileTERMS the 2008-2017 shares are expenditure. 100% 90% INAS was allocated over 90 percent of the Social FIGURAS 5A80% e 5B Action budget in 2018, of which the largest share 70% was directed to its district delegations (see Figure 60% 50% 6). In 2018, INAS and its delegations were allocated 40% a total of MT 5.5 b, equal to 91 percent of the Social 30% 20% Action Sector’s budget. On the other hand, MGCAS was Expenditure (%) Expenditure 10% allocated a total of about MT 0.5 b or 9 percent of the 0% sector’s budget. Of this, about 5 percent was dedicated

Share of Total Social Action of Total Share 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budget to MGCAS at the central level, and 4 percent to its DPIMAS & DDINAS Provincial-level Directorates. DPMAS INAS MGCAS Central Figure 6: Resource shares by Institution Source: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

6 Figure 6: Resource shares by institution Source: Author's calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

FIGURA 6 4.3 Resource use by administrative level

Spending for the Social Action Sector is highly decentralized, particularly to the district level (see Figure 7). While the ratio of central to non-central level resources was 60 to 40 percent in 2008, it became 15 to 85 percent both in 2017 and in 2018.

6 15|85

5

4 12|88 9|91 11|89 15|85

), CURRENT 3 9 12|88

11|89 2

24|76

38|62 60|40 53|47 1

Billions of Meticais (10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Budget Non-Central % Central (Percentage)

Figure 7: Resource shares by administrative level Source: Author’s calculations from the CGE 2008-2017; LOE 2018. Note: The 2018 shares are initial budget allocations while the 2008-2017 shares are expenditure.

Figure 7: Resource shares by administrative level Source:4.4 Author's Resource calculations from the CGE 2008-2017; use LOE by 2018. Social Protection Note: The 2018Programs shares are initial budget allocations (INAS while the 2008-2017 Programs) shares are expenditure. FIGURA 7 INAS Programs were allocated a total MT 4.7 b in 2018 budget (see the past four years (an average 56 percent between 2015 and 2018), followed Figure 8 A & B). This corresponds to 77 percent of the Social Action by PASP6 (23 percent), PASD7 (18 percent) and SSAS8 (%). Similarly, in 2017 Sector’s budget, 1.5 percent of total State Budget, and 0.4 percent of budget PSSB was allocated MT 3.1 b (or 68 percent of all INAS programs), PASP GDP. In recent years, INAS Programs have received an increasingly larger share MT 1.1 b (or 23 percent), PASD MT 283 m (or 18 percent), and SSAS MT 94 m of sector’s resources that culminated in this year’s budget. Among the four (or 3 percent). programs, the PSSB5 has consistently been allocated most of the resources over

NOMINAL TERMS PROPORTIONAL TERMS 5.0 100%

4.5 90%

4.0 80%

3.5 70% ) , CURRENT 9 3.0 60%

2.5 50%

2.0 40%

1.5 30%

1.0 20%

0.5 10%

0 0% Billions of Meticais (10

2015 2016 2017 2018 % allocation, Programs of INAS Share 2015 2016 2017 2018 SSAS SSAS PASP PASP PASD PASD PSSB PSSB Figure 8 A & B: Allocations to INAS Social Protection Programs Source: Author’s calculations from LOE 2015-2018.

5. Programa Subsidio Social Básico (PSSB) targets vulnerable households with no labour capacity, mainly people in old age and people with disability. 6. Programa Acção Social Productiva (PASP) – Public Works Programme, targets poor households with at least one member with labour capacity. 7. Programa Acção Social Directa (PASD) targets household affected by shocks. 8. Social Services. 7 Figure 8 A & B: Allocations to INAS Social Protection Programs Source: Author's calculations from LOE 2015-2018.

FIGURAS 8Ae 8B 600,000 567,290

507,840 500,000 498,866 466,063 427,000 400,000

355,500 339,736 300,000 287,000

200,000

100,000

2011 2012 2013 2014 2015 2016 2017 2018 0 Figure 9: Beneficiary Households of INAS Social Protection Programs Source: Author’s calculations from the CGE 2008-2017, LOE 2018, and Balanco do PES 2017.

In 2018, INAS Programs targeted 567,290 beneficiary households (see Programs Subsidies, approved on 6 August 2018, the Government has updated Figure 9).This represents an 11.6 percent increase relative to the 507,840 the subsidies values. Under the PSSB, the new values for subsidies are as follow: households targeted by Social Protection programs (PSSB, PASP, PASD and (a) MT 540 for one-person households; (b) MT 640 for two-person households; SSAS)9. The values of the transfers to beneficiary households of INAS programs (c) MT 740 for three-person households; (d) MT 840 for four-person households; Figureremained 9: Bene ciary the same since Households 2015, not being of INAS adjusted Social with Protection inflation. Nevertheless, Programs MT1,000 for five-person households. Under the PASP, the value of subsidy was Source:through Author's the Decree calculations n. 59/2018 from for the the CGE Revision 2008-2017, of the Value LOE of2018, Social and Assistance Balanco do PESupdated 2017. to MT 1,050.

5. How well has the Social Action Sector executed its past budgets?FIGURA 9

The Social Action Sector executed 80 percent of the sector budget in execution rate of the entire State Budget, and it is the second highest average 2017 (see Figure 10). Over the past ten years, the Social Action Sector has among social sectors10. executed on average 86 percent of its budget. This is on par with the average

EXECUTION RATE OF SOCIAL ACTION BUDGET 100%

90%

80%

70%

60%

50%

40%

30% Share of Social Action Budget of Social Action Share 20%

10%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0%

Figure 10: Social Action Budget Execution Source: Author’s calculations from the CGE 2008-2017.

Figure 10: Social Action Budget execution Source: Author's calculations from the CGE 2008-2017. 9. MEF, 2018 Documento da Fundamentação, page 28. 10. The Education Sector has shown the highest execution rate of 92 percent over the past decade. FIGURA 10 8 6. How has the Social Action Sector performed relatively to strategic objectives?

The Mozambican Government has set two ambitious goals for the meet its strategic objective of a 25 percent household coverage. Within this Social Protection Sector under its 2015-2019 Five Year Program measure of support, the government currently provides 309,806 vulnerable (PQG) and its 2015-2035 National Development Strategy (ENDE). As children with social assistance11. This is still around 40,000 children short of the mentioned earlier in the report, in the its medium-term strategy, the PQG, the government meeting its 2019 target. Government has set the target to cover 25 percent of households in a situation of vulnerability, starting from a 15 percent estimated baseline in 2015. The In order to reach the ambitious goals defined in the medium- and long-term target set in the ENDE is a 75 percent coverage rate of poor and long-term Government strategic documents, the allocations to the vulnerable households under Social Protection programs. Social Protection Programs should keep growing at a constant pace over the next few years. In addition, the challenges of (i) modernizing the According to the mid-term review of the 2015-2019 Five Year Program systems to manage beneficiaries, (ii) outsourcing payment mechanisms, (iii) (PQG), Mozambique provides 17 percent of vulnerable households re-registering current beneficiaries, etc. – which are ongoing processes- require with social assistance. This is nearly 8 percent away from its 2019 heavier investments in the coming years, as well as a substantial strengthening strategic target (see Figure 11). As of the last available data, Mozambique of the sector’s human resources. has still to cover an additional 8 percent of beneficiary households in order to

400,000 40%

400,000 SOCIAL ACTION PERFORMANCE 40% SOCIAL ACTION PERFORMANCE 350,000 35%

350,000 350,000 35% 350,000 300,000 30%

300,000 309,806 309,806 30% 309,806 309,806 250,000 25%

250,000 255,101 25% 25% 255,101 25% 200,000 20%

200,000 204,492 20.50% 20% 17.39% 204,492 20.50% 150,000 15.96% 17.39% 15%

150,000 15.76% 15.96% 15% 15.76% 100,000 10%

100,000 10%

50,000 5%

50,000 5%

0 0% 2014 2015 2016 2018 2019 0 PQG Target 0% 2014 2015 2016 2018 2019 % of vulnerable households benefiting from Basic Social Security programs PQG Target Number of vulnerable children benefiting from social support % of vulnerable households benefiting from Basic Social Security programs Figure 11: Social Action Performance RelativeNumber to PQG ofTargets vulnerable children benefiting from social support Source: Balanço Intermédio do Programa Quinquenal do Governo 2015-2019, Page 73.

ENSSB 2016-2024 - % OF GDP DEDICATED TO BASIC SOCIAL PROTECTION ENSSB 2016-2024 - % OF GDP DEDICATED TO BASIC SOCIAL PROTECTION 2024 2.24% 2024 2.24%

2018 0.6% 2018 0.6% 0% 0.5% 1/0% 1.5% 2.0% 2.5% 3.0%

0% 0.5% 1/0% 1.5% 2.0% 2.5% 3.0% Goal set for 2024 at 2.24% Current level in 2018 is just 0.6% Goal set for 2024 at 2.24% Current level in 2018 is just 0.6%

11. Author’s compilation from Balanço Intermédio do Programa Quinquenal do Governo 2015-2019, Page 73. 9

Figure 11: Social Action Performance relative to PQG targets FigureSource: 11:Balanco Social Intermedio Action Performance do Programa Quinquenal relative to doPQG Governo targets 2015-2019, Page 73. Source: Balanco Intermedio do Programa Quinquenal do Governo 2015-2019, Page 73. FIGURA 11 FIGURA 11 7. How equitable is the Social Action budget?

INAS recently introduced objective criteria to target beneficiaries in different MT 810 m respectively, followed by Tete, Manica and Gaza that received delegations by relying on demographic and poverty indicator. These criteria approximately MT 400 m each. Among the other provinces, aim at reducing inequity in the geographical distribution of resources allocated received the lowest allocation to INAS programs. As mentioned above, the most to the four Social Protection Programs (PSSB, PASP, PASD and SSAS). However, funded program across the country is PSSP, followed by PASP, PASD and SSAS in while nominal allocations per province show an improved targeting of most order of average allocation. However, in Zambézia the PASP program receives disadvantaged areas (e.g. Zambézia), ‘per-poor’ allocations reveal that the about half of the total resources dedicated to INAS programs. Similarly, the targeting of Social Protection Programs is still inequitable. Nampula province is allocated a higher than average share of the PASP.

Nampula and Zambézia provinces receive the largest nominal allocations from INAS programs relative to other provinces (see Figure 12). In 2018 Budget, Nampula and Zambézia were allocated MT 940 m and

PROPORTIONAL TERMS NOMINAL TERMS 1.0 100% 0.9 90% 0.8 80% 0.7 70% ), CURRENT 9 0.6 60% 0.5 50% 0.4 40% 0.3 30% 0.2 20% 0.1 10%

0 Budget, % Programs of INAS Share 0% Billions of Meticais ( 10 NIASSA CABO NAMPULA TETE SOFALA GAZA MAPUTO MAPUTO NIASSA CABO NAMPULA TETE SOFALA GAZA MAPUTO MAPUTO DELGADO ZAMBEZIA MANICA CITY DELGADO ZAMBEZIA MANICA INHAMBANE PROVINCE CITY SSAS SSAS PASP PASP PASD PASD PSSB PSSB Figure 12A & B: 2018 Allocations to INAS Programs by Province Source: Author’s compilation from the 2018 LOE. ), CURRENT 9 Photo: © UNICEF Mozambique/2012/Ian Berry/Magnum Photos

10 Billions of Meticais (10

2011 2012 2013 2014 2015 2016 2017 2018 Alocação aos Programas em Relação ao OE Alocação aos Programas em Relação ao PIB

Figure 12A, B & C: 2018 Allocations to INAS Programs by Province Source: Author's compilation from the 2018 LOE.

FIGURAS 12A, 12B e 12C 2018 BUDGET

CABO DELGADO

2018 BUDGET NIASSA

NAMPULA

TETE

ZAMBEZIA 2018 BUDGET

SOFALA INAS Programs – Per Capita Spending

MANICA CABO DELGADO 280 1035 NIASSA MT NAMPULA 376 was the Per Capita TETE allocation to the poor

INHAMBANE in Mozambique ZAMBEZIA

GAZA

SOFALA INAS Programs – Per Capita Spending

MANICA 280 1035 MAPUTO PROVINCE

Figure 13: Geographical equity of Social Action Spending Source: Author’s compilation from the 2018 LOE, considering the MEF 2017 Poverty Incidence MAPUTO CITY Index from the Fourth National Poverty Assessment.

INHAMBANE Nevertheless, 2018 per-capita Social Action Sector spending on the allocation – taking into account the estimated poor population- in 2018 poor is lowest in Zambézia, Niassa, Nampula and Sofala (see Figure is MT 280 while it is approximately MT 1000 in Maputo City. This example 13). While considering nominalGAZA allocations of INAS Social Action Programs reveals that the relationship between the geographical distribution of by Province, Zambézia province receives the second highest gross allocation, poverty and the distribution of the sector’s resources through INAS Social Figurebut 13:on a Geographicalper person basis (i.e. per equity capita allocation of Social among Actionthe poor spendingAction programs is still very weak. Source:population), Author's receives compilation the lowest allocation. from In fact,the Zambézia’s 2018 LOE,per person considering the MEF 2017 Poverty Incidence Index from the Fourth National Poverty Assessment. MAPUTO PROVINCE 11 MAPUTO CITY FIGURA 13

Figure 13: Geographical equity of Social Action spending Source: Author's compilation from the 2018 LOE, considering the MEF 2017 Poverty Incidence Index from the Fourth National Poverty Assessment.

FIGURA 13 GLOSSARY OF BUDGET TERMS

Per capita allocation in poor population per INAS Delegation (Consumption Poverty Incidence – 4th National Assessment, 2014/2015, Ministry of Economy and Finance); • Initial Allocation (Dotação Inicial): The first allocation of funds, approved Thus for the entire year of 2017, the Chicualacuala delegation, by Parliament for example, will have funds to cover the costs of the various social• Revised protection Initial Allocation programmes (Dotação equivalent Rectificativa to): almost A revised MT allocation 1,554 of forfunds, each approved of the by inhabitants Parliament regarded as poor who live in the districts covered by that INAS delegation, while, at the other extreme,• Updated Allocationthe Gurúe (Dotação delegation, Actualizada in Zambézia,): The total funds received that arrive an at allocationthe disposal equivalent of a given social to MT action 134 institution per capita, although it covers more than a million people estimated as poor. This disparity • Expenditure (Despesa Realizada): Allocated funds spent on social action has been noted in previous years. investment and recurrent costs It• Budgetis hoped Execution that the(Execução new doINAS Orçamento Information): Percentage Management of allocated Systemfunds spent (e-INAS), out of the which total allocation should be operational in 2017, might help INAS better distribute and plan resources, making• Nominal management Values; Current: more Numbers efficient not corrected and for makingthe effect possibleof inflation a Photo: ©UNICEF/Mozambique greater impact of the monetary transfers on the vulnerable population,• Real Values; significantly Constant: Numbers improving corrected the for inflationmonitoring systems.

LIST OF ACRONYMS

• b: Billion • PASD: Direct Social Action Program budgetary terms glossary • CGE: General State Account (Final Budget Report) • PASP: Productive Social Action Program

• InitialCFMP: Allocation: Medium-term The firstFiscal allocation Plan of funds AGO Apoio Geral ao Orçamento• PES: Economic and Social PlanMGCAS Ministry of Gender, Children and Social Action approved by Parliament AF Household • CUT: Single Treasury Account • PQG: Government Five YearMPD Plan Ministry of Planning and Development Corrected Allocation: A corrected allocation CGE General State Account MT Metical • ofENDE: funds approvedNational Developmentby Parliament Strategy CUT Single Treasury • AccountPSSB: Basic Social Allowance Program OE State Budget • ENSSB: National Basic Social Security Strategy DFID Department for• InternationalREO: State Budget Execution Report (Budget Update Report) Updated Allocation: The total amount of Development UK PASD Direct Social Action Programme funds made available to a particular institution • e-SISTAFE: Financial Management Information SystemDNO National Budget• DirectorateSDSMAS: District Service forPASP Health, Women, Productive and Social Action Programme Expenditure Undertaken: Allocated funds • GDP: Gross Domestic Product EKN Embassy of the • KingdomSSAS: Social of the Action Social ServicesPES Economic and Social Plan spent on investment, services and health Netherlands products PQG Government Five Year Programme • ILO: International Labor Organization ENDE National Development• UGB: StrategyAutonomous Budget Holder Code PSSB Basic Social Allowance Programme • ExecutionINAS: National of the Social Budget: Action Percentage Institute of ENSSB National Basic Social• UNICEF: Security United Nations Children’s Fund allocated funds spent out of the total allocation. Strategy SS Social Subsidies • LOE: State Budget Law FMI International Monetary• US$: United Fund States Dollar (Currency)SSAS Social Action Social Services Nominal, or current values: Numbers GDP Gross Domestic Product UNICEF United Nations Children’s Fund • notMAAC: corrected Ministry to take of Veterans’account of Affairs the effect of • WB: World Bank inflation. ILO International Labour Organisation WB World Bank • MEF: Ministry of Economy and Finance Real values: Numbers corrected to take INAS National Social Action Institute • acMGCAS:count of theMinistry effect of of Gender, inflation Children and Social ActionINE National Statistics Institute LOE State Budget Law • m: Million • MT: Mozambican Metical (Local Currency) 16

International Labour

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